Budgeting for sexed semen

Sexed semen is relatively a new technology that has proven to produce a higher proportion of female calves than conventional semen. Because female calves are much more valuable than male calves in a dairy enterprise, the use of sexed semen is attractive. However, research has also proven that the insemination with sexed semen decreases the conception rate (CR) compared to using conventional semen. Additionally, sexed semen is a substantially more expensive technology than conventional semen. Therefore, the economic decision of using sexed semen should be based on a careful analysis of the economics between additional investments and potential revenues. Because of the higher cost and reduced CR, sexed semen seems more appropriate for virgin heifers (De Vries, 2009), which have naturally higher CR than adult cows.

How do you calculate the economic value of sexed semen?

Partial budgeting is a suitable method to analyze the economic benefits of using sexed semen on heifers. Partial budgeting tracks the additional revenues, the additional costs, the revenues foregone and the reduced costs when a technological change is introduced.

Reproductive programs that include a series of services must include the aggregation of the above factors for each one of the services. Because these occur at different times depending on CR, a fair comparison has to be performed using a discount rate to bring all economic balances to present values in order to calculate and compare net present values (NPV).

The economic value of a sexed semen reproduction protocol would lack of utility if it is not compared with conventional semen reproduction programs. Therefore, the economic value of using sexed semen should be the difference between a sexed semen protocol and the conventional semen: if this value turns to be positive, the sexed semen has an economic advantage over the conventional semen. Assuming that producers will attempt 5 reproductive services on heifers (Kuhn et al., 2006), the analysis should include the economic values when sexed semen is used in 1, 2, 3, 4, or 5 consecutive services. Those services not using sexed semen would then use conventional semen.